AVC Patent Portfolio License Briefing Briefing*

V10/24/11

*This presentation is for information purposes only. Actual license agreements will provide the only definitive and reliable statement of license terms.

Objectives
Offeranalternativelicensefortheconvenienceof usersenablingthemtoacquirepatentrightsnecessary fortheAVC/H.264standardfrommultiplepatent for the AVC/H.264 standard from multiple patent holdersinasingletransactionratherthannegotiating licenseswitheachofthemindividually Align with AVC product value chain AlignwithAVCproductvaluechain EnhanceuseofAVCacrossdifferentbusinessmodels
o Capstoprovidecostpredictability o Thresholdlevelstoencourageearlystageadoptionand minimizeimpactonlowervolumeusers

Coverage
AVCStandardasdefinedinISO/IECIS1449610:Information technology Codingofaudiovisualobjects Part10:Advanced VideoCodingandITUTRec.H.264,March2005:SeriesH: Vid C di d ITU T R H 264 M h 2005 S i H AudiovisualandMultimediaSystems:Infrastructureof audiovisualservices Codingofmovingvideo:Advancedvideo codingforgenericaudiovisualservices CoverageexpandedtoincludeAVCFidelityrangeExtensions (FRExt/AVC)per15November2005newsrelease (http://www.mpegla.com/Lists/MPEG%20LA%20News%20List/At tachments/167/n_051115_avc.pdf) ta hments/167/n 05 11 15 a pdf) CoverageupdatedtoconformwithrevisionstotheAVC/H.264 StandardasdefinedinISO/IEC1449610:2008,4thEdition (20080915)per2February2009pressrelease (2008 09 15) per 2 February 2009 press release (http://www.mpegla.com/Lists/MPEG%20LA%20News%20List/At tachments/209/n_09_02_02_avc.pdf)

Coverage
E h EachpatentisessentialtotheAVCstandard i i l h AVC d d
o Specificimplementationsforwhichtherearecompetitive alternativesnotincluded

Patentholderssubmittedpatentsforevaluationof theiressentialitybyindependentpatentexperts their essentiality by independent patent experts Worldwidecoverage(includingessentialcounterparts) g ( g p ) Licensorsincludeallessentialpatents

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Coverage
Att h Attachment1totheLicenseisupdated t 1 t th Li i d t d regularly
o See See http://www.mpegla.com/main/programs/AVC/Page s/PatentList.aspx

NewLicensorsandessentialpatentsmaybe addedatnoadditionalroyaltyduringthe currentterm;coverageforentireterm

Current Patent Owners

EssentialPatentHolderscurrentlyinclude:

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AppleInc. CiscoSystemsCanadaIPHoldings Company DAEWOOElectronicsCorporation DolbyLaboratoriesLicensing Corporation ElectronicsandTelecommunications ResearchInstitute(ETRI) FranceTlcom,socit France Tlcom socit anonyme* FraunhoferGesellschaft zur Foerderung der angewandten Forschung e.V. FujitsuLimited Hewlett PackardCompany HewlettPackard Company Hitachi,Ltd. JVCKENWOODCorporation Koninklijke PhilipsElectronicsN.V. LGElectronicsInc. LG Electronics Inc. MicrosoftCorporation
*Uptoandthroughdateofpatentexpiration

MitsubishiElectricCorporation NTTDoCoMo,Inc. NipponTelegraphandTelephone Corporation(NTT) p ( ) PanasonicCorporation Polycom,Inc. RobertBoschGmbH SamsungElectronicsCo.,Ltd. g , Sedna PatentServices,LLC SharpCorporation SiemensAG SonyCorporation y p TandbergTelecomAS Telefonaktiebolaget LMEricsson TheTrusteesofColumbia UniversityintheCityof NewYork N Y k ToshibaCorporation

AVC/H.264 AVC/H 264 License

WhereEndUserpays Where End User pays

Subscription

TitlebyTitle

AVC Codec Manufacture andSale

Internet Broadcast Free Television

Where Remunerationisfrom Othersources

AVC/H.264 License Terms Codec Manufacture and Sale

ProductssoldtoendusersandOEMforPCbutnotpartofOS(decoder, encoderorproductconsistingofonedecoderandoneencoder=unit) d d i i f d d d d i )
o 0 100,000units/year=noroyalty(availabletoonelegalentityinanaffiliated group) o US$0.20perunitafterfirst100,000units/year o Ab Above5millionunits/year,royalty=US$0.10perunit 5 illi it / lt US $0 10 it o Enterprisecap:$3.5M/year20052006,$4.25M/year200708,$5millionper year200910,$6.5millionperyear20112105

AnEnterprisesellingbrandedOEMforPCOSmaypayforitscustomer
o 0 100 000 units/year = no royalty (available to one legal entity in an affiliated 0 100,000units/year=noroyalty(availabletoonelegalentityinanaffiliated group) o US$0.20perunitafterfirst100,000units/year o Above5millionunits/year,royalty=US$0.10perunit o Enterprise cap: $3.5 M/year 20052006, $4.25 M/year 200708, $5 million per Enterprisecap:$3.5M/year2005 2006,$4.25M/year2007 08,$5millionper year200910,$6.5millionperyear20112015

IncludesrighttomanufactureandsellAVCencodersanddecoders withtherightofEndUserstousethemforpersonalandconsumer (includinginternalbusiness)purposeswithoutremuneration g p p butnotforotheruses RoyaltiesbeginJanuary1,2005

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AVC/H.264 License Terms Participation Fees

Where End User pays for AVC Video WhereEndUserpaysforAVCVideo
o Subscription(notlimitedbytitle) 100,000orfewersubscribers/yr= noroyalty;>100,000to250,000subscribers/yr=$25,000;>250,000to 500,000subscribers/yr=$50,000;>500,000to1Msubscribers/yr= $75,000;>1Msubscribers/yr=$100,000 $75 000 >1M subscribers/yr $100 000 o TitlebyTitle 12minutesorless=noroyalty;>12minutesin length=lowerof(a)2%or(b)$0.02pertitle

Whereremunerationisfromothersources
o InternetBroadcastAVCVideo(nottitlebytitle,notsubscription) noroyaltyforlifeoftheAVCPatentPortfolioLicense o FreeTelevision (a)onetime$2,500pertransmissionencoderor (b) a ua ee s a i g a $ ,500 o annualfeestartingat$2,500for>100,000HHrisingtomaximum 00,000 isi g o a i u $10,000for>1,000,000HH

Enterprisecap:$3.5M/yr200607,$4.25M/yr200809, $5M/yr2010,$6.5millionperyear20112015 RoyaltiesbeginJanuary1,2006

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Term
First Term: August 1 2002 December 31 2010 FirstTerm:August1,2002 December31,2010 SecondTerm:January1,2011 December31, 2015 Renewableforsuccessive5yearperiodsforthe lifeofanyPortfoliopatentonreasonableterms life of any Portfolio patent on reasonable terms andconditions RateProtectiononRenewal royaltyratesfor y y specificlicensegrantswillnotincreaseby morethan10%atrenewals*
*Annualroyaltycapsarenotsubjecttothe10%limitation

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Other Important Provisions

MostFavorableroyaltyratesclause Licensee data is protected as confidential Licenseedataisprotectedasconfidential Grantbackonessentialpatentssimilarin scopetolicensegrants scope to license grants Nomarkingrequirements

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